Risk managers are keeping careful watch on insurance marketpremiums, wondering how long they can enjoy the soft pricing thathas been in place since 2004. Advisen, a New York-based insuranceinformation and advisory firm, puts a number on that question,noting that it's an overabundance of supply that limits propertyand casualty insurers' ability to raise prices, in the form of $74billion of excess capacity.
Meanwhile, the sluggish economy is limiting the demand side ofthe equation, according to Advisen's analysis.
Advisen says that excess capacity could be wiped out by a single“mega-catastrophe” or a number of smaller catastrophes, but arguesthat the more likely scenario is a slow erosion as the low level ofpremiums takes its toll on insurers' capital.
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